Turning point expected in Mandalay property market

While a slower economy and high property taxes are being blamed for declining real estate sales, Colliers International predict a turning point in Myanmar's real estate market.

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Colliers International Myanmar says large vacant land plots have continued to bolster Mandalay's property growth potential.

Steeper falls in less populated residential areas of Mandalay have led to a significant drop in property prices of 10 to 30 per cent over the last five years.

However, since falling from its peak in 2013, the property market faces the prospect of a turning point.

Colliers International Myanmar says large vacant land plots have continued to bolster Mandalay's property growth potential. And members of the Mandalay Region Real Estate Agents Development Association also agree, saying that market conditions are also looking better.

The Association also noted the cyclical nature of Myanmar's property market, and that the current price drops indicate a turning point is on the horizons.

Purchase trends in the market also reveal that real estate is being bought as homes rather than investment properties.

U Wunna Soe, property agent from Poe Lamin Real Estate Agency, agreed. “Compared to last year, the prices in 2018 have fallen by an average of 10 per cent or more,” he said.

Soe also indicated that the reasons for declining real estate sales included a slower economy, high property taxes and issues involving squatters in certain areas.

In Myanmar, current tax rates in residential properties sold for up to K30 million are at a rate of 15 per cent upon sale. Properties between K31 million and K100 million incur a tax rate of 20 per cent, while those valued at more than K100 million will be taxed at a rate of 30 per cent.

High tax rates have also meant the number of property sale registrations has also fallen significantly. The Mandalay Region Real Estate Agents Development Association reports that 621 properties were registered in 2016-2017 compared to the 1,603 in 2015-2016.

According to regional authorities, there are no plans to lower those tax rates or amend valuation methods to bring prices down.

However, with a turning point fast approaching, Colliers expects more master planned developments to emerge with the increasing demand for gated landed residences.

Colliers also predicts a promising market for horizontal residences such as detached villas in Mandalay City, backed by its vast developable land.